Title XXIX, Commerce and Trade

(1) If an item states that it is "payable through" a bank identified in the item: (a) The item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item; and (b) The item may be presented for payment only by or through the bank. (2) If an …

A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notice or orders must be given under this article and under Article 3.

(1) For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of 2 p.m. or later as a cutoff hour for the handling of money and items and the making of ent…

(1) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may waive, modify, or extend time limits imposed or permitted by this chapte…

(1) "Agreement for electronic presentment" means an agreement, clearing-house rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item ("presentment notic…

An action to enforce an obligation, duty, or right arising under this article must be commenced within three (3) years after the claim for relief accrues.

Applicability of article -- Item indorsed "pay any bank." (1) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the…

(1) A collecting bank must exercise ordinary care in: (a) Presenting an item or sending it for presentment; (b) Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank's transferor after learning that the item has not been paid or …

Subject to Article 3 of this chapter concerning conversion of instruments (KRS 355.3- 420) and restrictive indorsements (KRS 355.3-206), only a collecting bank's transferor can give instructions that affect the bank or constitute notice to it, and a collecting bank is not liable …

(1) A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved, and the method generally used by it or others to present those items.…

If a customer delivers an item to a depositary bank for collection: (1) The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item…

Any agreed method that identifies the transferor bank is sufficient for the item's further transfer to another bank.

(1) A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that: (a) The warrantor is a person entitled to enforce the item; (b) All signatures on the item are authenti…

(1) (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, 1. The person obtaining payment or acceptance, at the time of presentment; and 2. A previous transferor of the draft, at the time of transfer, warrant to …

(1) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warrant…

and proceeds. (1) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either: (a) In case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied; (b) In case of an item …

For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, if the bank otherwise complies with the requirements of KRS 355.3-302 on what constitutes a holder in due course.

Liability of drawer or indorser. (1) Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to accept or pay a record providing notice that the bank holds the item for acceptance or payment. The notice must…

(1) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules, and the like, or agreement. In the absence of such prescription: (a) The medium of settlement is cash or credit to an a…

of item. (1) If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement for the item which is or becomes final, the bank may revoke the settlement given b…

credits become final -- When certain credits become available for withdrawal. (1) An item is finally paid by a payor bank when the bank has first done any of the following: (a) Paid the item in cash; (b) Settled for the item without having a right to revoke the settlement under s…

(1) If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not been finally paid, the item must be returned by the receiver, trustee, or agent in charge of the closed bank to the presenting bank or the closed bank's cust…

dishonor -- Return of items by payor bank. (1) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and reco…

(1) If an item is presented to and received by a payor bank the bank, is accountable for the amount of: (a) a demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyon…

-- Order in which items may be charged or certified. (1) Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate, suspend, or modify the bank's right or duty to pay an item or to charge i…

(1) A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and…

determining insufficiency of account. (1) Except as otherwise provided in this article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overd…

(1) A customer or any person authorized to draw on the account if there is more than one (1) person may stop payment of any item drawn on the customer's account or close the account by an order to the bank describing the item or account with reasonable certainty received at a tim…

A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six (6) months after its date, but it may charge its customer's account for a payment made thereafter in good faith.

(1) A payor or collecting bank's authority to accept, pay, or collect an item or to account for proceeds of its collection, if otherwise effective, is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection i…

alteration. (1) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the custo…

If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prev…

notify customer of dishonor. A bank that takes a documentary draft for collection shall present or send the draft and accompanying documents for presentment and, upon learning that the draft has not been paid or accepted in due course, shall seasonably notify its customer of the …

If a draft or the relevant instructions require presentment "on arrival," "when goods arrive" or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accept because the goods have not arrive…

reasons for dishonor -- Referee in case of need. Unless otherwise instructed and except as provided in Article 5 of this chapter, a bank presenting a documentary draft: (1) Must deliver the documents to the drawee on acceptance of the draft if it is payable more than three (3) da…

expenses. (1) A presenting bank that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal with the goods in any reasonable manner. (2) For its reasonable expense…

This article may be cited as the Uniform Commercial Code -- Funds Transfers.

Except as otherwise provided in KRS 355.4A-108, this article applies to funds transfers defined in KRS 355.4A-104.

(1) In this article: (a) "Payment order" means an instruction of a sender to a receiving bank, transmitted orally or in a record, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if: 1. The instruction does not state a condition to…

In this article: (1) "Funds transfer" means the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator's bank or an intermediary ba…

(1) In this article: (a) "Authorized account" means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank. If a customer does not so designate an account, any account of the customer is an …

(1) The time of receipt of a payment order or communication canceling or amending a payment order is determined by the rules applicable to receipt of a notice stated in KRS 355.1-202. A receiving bank may fix a cutoff time or times on a funds-transfer business day for the receipt…

Regulations of the board of governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this article to the extent of the inconsistency.

(1) Except as provided in subsection (2) of this section, this article does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act of 1978 (Title XX, P.L. 95-630, 92 Stat. 3728, 15 U.S.C. secs. 1693 et seq.) as amended from time to time. (…

(1) "Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of: (a) Verifying that a payment order or communication amending or canceling a payment order is that of the customer; or (b) Detecting error in the transmission…

(1) A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency. (2) (a) If a bank and its customer have agreed that the authenticity of payment o…